The Naira has strengthened in the parallel market, appreciating to N1,640 per dollar from N1,655 per dollar on Monday.
Data from the Central Bank of Nigeria (CBN) indicates that the exchange rate in the Nigerian Foreign Exchange Market (NFEM) improved to N1,526.3 per dollar from N1,533.5 per dollar on Monday, reflecting a N7.2 gain for the naira.
As a result, the gap between the parallel market and the NFEM rate narrowed to N113.7 per dollar, down from N121.5 per dollar on Monday.
Similarly, in the official foreign exchange market, the Naira appreciated to N1,526.3 per dollar.
This improvement follows a significant depreciation 18 months ago. However, the Naira’s performance since December has offered a ray of hope, with its value stabilizing within a narrow range of N1,550 to N1,520 per dollar.
Analysts credit this nearly two-month stability to reforms by the CBN, including the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in December and the upcoming FX Code, scheduled to launch by the end of January.
Taiwo Oyedele, Chairman of Nigeria’s Fiscal Policy and Tax, noted that the new FX Code would boost transparency, with approximately $20 million being cleared from the market daily.
CBN Governor Olayemi Cardoso highlighted that the exchange rate reforms, which have made the Naira more competitive, create a favorable environment for investors.
“We’ve found ourselves in a situation where the foreign exchange rate has adjusted,” Cardoso said in a virtual briefing organised by the Nigeria Economic Summit Group (NESG), referring to the naira’s sharp depreciation last year.
The weakening offers investors the chance to “take advantage” of a currency that has become “a lot more competitive,” he said.